Continuing abuse of the Hatch-Waxman act by pharmaceutical patent holders and the failure of the 2003 amendments

Hastings Law Journal

Volumn 60, Issue 1, 2008, Pages 171-200

  Avery, Matthew ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 58849103626     PISSN: 00178322     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (253)

1. Press Release, Henry A. Waxman, Representative Henry A. Waxman on the Delay of Approval of Generic Drugs (Nov. 20, 2001), available at http://www.citizen.org/congress/reform/ drug-patents/bmsg/articles.cfm?ID=6496.
2. Wesley M. Cohen et al., Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not) 23-25 (Nat'l Bureau of Econ. Research, Working Paper No. 7552, 2000) (reporting that, according to a 1994 survey, the pharmaceutical industry is one of the rare sectors that uses patents to appropriate rents);
3. see also I FED. TRADE COMM'N, ANTICIPATING THE 21ST CENTURY: COMPETITION IN THE NEW HIGH-TECH, GLOBAL MARKETPLACE ch.6, at 7 (1996) (describing a study demonstrating that only 40% of pharmaceutical inventions would have been developed in the absence of patent protection), available at http://www.ftc.gov/opp/global/report/ gc-VI.pdf.
4. See J.F. Pritchard et al., Making Better Drugs: Decision Gates in Non-Clinical Drug Development, 2 NATURE REV. DRUG DISCOVERY 542, 542 (2003) (describing failure risks associated with drug discovery).
5. See Joseph A. DiMasi & Henry G. Grabowski, The Cost of Biopharmaceutical R&D: Is Biotech Different?, 28 MANAGERIAL & DECISION ECON. 469, 477 (2007) (calculating average research and development costs of $1.32 billion per new molecule approved by the Food and Drug Administration (FDA)).
6. See Paying off Generics to Prevent Competition with Brand Name Drugs: Should It Be Prohibited?: Hearing Before the S. Comm. on the Judiciary, 110th Cong. 150 (2007) [hereinafter Paying off Hearing] (statement of Billy Tauzin, President and Chief Executive Officer, Pharmaceutical Research and Manufacturers of America).
7. See CONG. BUDGET OFFICE, HOW INCREASED COMPETITION FROM GENERIC DRUGS HAS AFFECTED PRICES AND RETURNS IN THE PHARMACEUTICAL INDUSTRY 37 n.2 (1998) (reporting that 95% of off-patent drugs had generic equivalents in 1994).
8. For example, the generic form of Prozac (fluoxetine) claimed approximately 65% of the market within a month of generic entry, 80% by the end of the first generic competitor's 180-day exclusivity period, and leveled out at almost 90% after a year of generic competition. See Benjamin G. Druss et al., Listening to Generic Prozac: Winners, Losers, and Sideliners, 23 HEALTH AFF. 210, 214 (2004).
9. Saami Zain, Sword or Shield? An Overview and Competitive Analysis of the Marketing of "Authorized Generics," 62 FOOD & DRUG L.J. 739, 742 (2007) ("Recently, under the rubric of 'Lifecycle Management,' consultants and pharmaceutical executives have been encouraging various actions to squeeze the most profitability from existing drugs. Certain of these actions have been criticized as unethical, anticompetitive or even fraudulent." (footnote omitted)).
10. Carmelo Giaccotto et al., Drug Prices and Research and Development Investment Behavior in the Pharmaceutical Industry, 48 J.L. & ECON. 195, 195 (2005) (reporting a positive correlation between profits and research spending).
11. Note that the standard patent term is twenty years from the date when the patent application was filed. 35 U.S.C. § 154(a)(2) (2006). But because of the lengthy regulatory process, the average pioneer drug only enjoys eleven to twelve years of patent protection after FDA approval. Paying off Hearing, supra note 5, at 151-52.
12. Andrew A. Caffrey, III & Jonathan M. Rotter, Note, Consumer Protection, Patents and Procedure: Generic Drug Market Entry and the Need to Reform the Hatch-Waxman Act, 9 VA. J.L. & TECH, 1, 3-4 (2004)
13. (citing CONG. BUDGET OFFICE, supra note 6, at xiii).
14. Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 (1984) [hereinafter Hatch-Waxman Act] (codified as amended at 21 U.S.C. § 355(j) (2006), 35 U.S.C. §§ 156, 271(e) (2006)).
15. 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (2000) (amended 2003).
16. See discussion infra Part II.
17. See discussion infra Part III.A.
18. See Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066 [hereinafter Medicare Modernization Act or "MMA"] (effective Dec. 8, 2003) (codified as amended in scattered sections of 21 and 42 U.S.C).
19. It is beyond the scope of this Note to analyze the following issues related to the Hatch-Waxman Act: (1) biological generics, (2) medical devices, (3) patent term extensions due to delays in regulatory approval, (4) antitrust issues, and (5) the section 271(e)(1) safe harbor. For a discussion of biological generics, see generally Tam Q. Dinh, Potential Pathways for Abbreviated Approval of Generic Biologies Under Existing Law and Proposed Reforms to the Law, 62 FOOD & DRUG L.J. 77 (2007).
20. For a discussion of medical devices, see generally Andrew J. Paprocki's Note, Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc.: Can the Patent-Term Extension of the Hatch-Waxman Act Be Used as Leverage in Drug Patent Infringement Settlements?, 46 JURIMETRICS J. 471 (2006).
21. Paprocki discusses the unusual case where an infringing drug receives FDA approval before the patent holder's drug, thereby preventing the patent holder from getting a patent term extension upon FDA approval. Id. at 488 ("The [Hatch-Waxman Act] seems to permit an infringing drug developer to prevent a pioneer drug manufacturer from obtaining a patent-term extension or to withhold the patent-term extension as leverage in settlement negotiations.").
22. For a discussion of antitrust issues, see generally John Fazzio, Pharmaceutical Patent Settlements: Fault Lines at the Intersection of Intellectual Property and Antitrust Law Require a Return to the Rule of Reason, II J. TECH. L. & POL'Y I (2006),
23. and C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81 N.Y.U. L. REV. 1553 (2006).
24. For a discussion of the section 271(e)(1) safe harbor, see generally Sarah J. Chickos, Navigating the Safe Harbor: Guidance from the Courts on Qualifying for the 35 U.S.C. 271(e)(1) Exemption from Patent Infringement of Health Care Related Inventions, 24 J. CONTEMP. HEALTH L. & POL'Y 43 (2008).
25. See 21 U.S.C. §355(a) (2006) ("No person shall introduce or deliver for introduction into interstate commerce any new drug, unless an approval of an application ... is effective with respect to such drug.").
26. 21 C.F.R. § 312.23 (2008).
27. Pennington Parker Landen, Federal Preemption and the Drug Industry: Can Courts Co-Regulate?, 43 FOOD DRUG COSM. L.J. 85, 100 (1988);
28. see also 21 U.S.C. § 355(a)-(b) (2006 & Supp. II 2008);
29. C.F.R. § 314.50 (2008).
30. See 21 U.S.C. § 355(a).
31. According to the FDA, "[a] generic drug is identical, or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price." FDA, Office of Generic Drugs Home Page, http://www.fda.gov/cder/ogd/ (last visited Nov. 13, 2008). A generic drug is bioequivalent to a listed drug if- (i) the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug when administered at the same molar dose of the therapeutic ingredient under similar experimental conditions in either a single dose or multiple doses. 21 U.S.C. § 355(j)(8)(B).
32. Holly Soehnge, The Drug Price Competition and Patent Term Restoration Act of 1984: Fine-Tuning the Balance Between the Interests of Pioneer and Generic Drug Manufacturers, 58 FOOD & DRUG L.J. 51, 52 (2003).
33. Id. at 53-54.
34. H.R. REP. NO. 98-857, pt. 1, at 17 (1984).
35. Id.
36. 733 F.2d 858, 863 (Fed. Cir. 1984). The Hatch-Waxman Act created an experimental use exception for drug manufacturers that negated Roche. See 35 U.S.C. § 271(e)(1) (2006).
37. Mary Atkinson, Patent Protection for Pharmaceuticals: A Comparative Study of the Law in the United States and Canada, 11 PAC. RIM L. & POL'Y J. 181, 184 (2002).
38. Pub. L. No. 98-417, 98 Stat. 1585 (1984) (codified as amended at 21 U.S.C. § 355(j) (2006), 35 U.S.C. §§ 156, 271(e) (2006)).
39. Abbott Labs. v. Young, 920 F.2d 984, 991 (D.C. Cir. 1990) (Edwards, J., dissenting);
40. see also H.R. REP. NO. 98-857, pt. 1, at 14-15.
41. See H.R. REP. NO. 98-857, pt. 1, at 16.
42. 21 U.S.C. § 355(j)(2)(A)(ii)-(iv).
43. Id. § 355(j)(2)(A).
44. See Requirements for Submission of In Vivo Bioequivalence Data, 68 Fed. Reg. 61,640, 61,645 (proposed Oct. 29, 2003) (to be codified at 21 C.F.R. pts. 314 & 320) (reporting estimates of ANDA preparation and filing costs between $300,000 and $1 million);
45. Thomas Chen, Note, Authorized Generics: A Prescription for Hatch-Waxman Reform, 93 VA. L. REV. 459, 464 (2007).
46. See 21 U.S.C. § 355(a).
47. H.R. REP. NO. 98-857, pt. 2, at 5;
48. see also 35 U.S.C. § 271(e)(1) (2006) ("It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention ... solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.").
49. See supra note 27 and accompanying text. Note that it is not clear whether the section 271(e)(1) safe harbor protects researchers from infringement liability for using patented "research tools" for drug research.
50. See, e.g., Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 205 n.7 (2005);
51. Amgen v. Int'l Trade Comm'n, 519 F.3d 1343, 1348 (Fed. Cir. 2008);
52. Proveris Scientific Corp. v. Innovasystems, Inc., 536 F.3d 1256, 1264 (Fed. Cir. 2008);
53. see also Chickos, supra note 17.
54. 21 U.S.C. § 355(j)(2)(A)(vii)(I)-(IV).
55. See FED. TRADE COMM'N, GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION: AN FTC STUDY 10 (2002) (reporting challenges involving 130 drugs between 1984 and 2000); Examining the Senate and House Versions of the "Greater Access to Affordable Pharmaceuticals Act": Hearing Before the S. Comm. on the Judiciary, 108th Cong. 113, 117 (2003) (statement of Timothy Muris, Chairman, Federal Trade Commission) (noting challenges involving more than eighty drugs between January 2001 and June 2003).
56. 21 U.S.C. § 355(j)(5)(A)-(B).
57. 35 U.S.C. § 271(e)(2)(A) ("It shall be an act of infringement to submit... an [ANDA] for a drug claimed in a patent or the use of which is claimed in a patent....").
58. 21 U.S.C. § 355(j)(2)(B).
59. Id. § 355(j)(5)(B)(iii).
60. Id.
61. Id.
62. Id. § 355(j)(5)(B)(iv)(II)(dd).
63. Id. § 355(j)(5)(B)(iii)(I)-(IV).
64. H.R. REP. NO. 98-857, pt. 1, at 28.
65. Id.
66. Id.
67. 21 U.S.C. § 355(j)(5)(B)(iv).
68. Id. Prior to the Medicare Modernization Act, this clause also permitted approval of later-filing applicants if there was a court decision of patent invalidity or noninfringement. This provision has effectively moved into the forfeiture provisions of the Medicare Modernization Act.
69. See discussion infra Part III.C.
70. See Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1074 (D.C. Cir. 1998) (overturning an FDA requirement that the first filer was only entitled to the 180-day exclusivity if it successfully defended against a patent infringement suit by the NDA holder);
71. see also Purepac Pharm. Co. v. Friedman, 162 F.3d 1201, 1205 (D.C. Cir. 1998).
72. Representative Henry Waxman, Speech at the Generic Pharmaceutical Association's First Annual Policy Conference: Securing the Future of Affordable Medicine (Sept. 20, 2005), available at http://www.house.gov/waxman/news- files/news-statements-generic-pharmaceutical%20-association- 9.20.05.htm.
73. See Leila Abboud, Drag Makers Use New Tactic to Ding Generics, WALL ST. J., Jan. 27, 2004, at B1 ("In 2002, when Barr successfully challenged the patent protection on Eli Lilly & Co.'s big antidepressant Prozac, Ban got revenue of about $368 million from the new drug, or 31% of its total for the year.").
74. For example, when generic Prozac (Fluoxetine) entered the market, the first generic challenger sold it at $1.91/capsule, or 12% below the cost of brand-name Prozac. Two months after the exclusivity period expired, multiple generics had entered the market and the price of generic Prozac had dropped to $0.32/capsule. Druss et al., supra note 7, at 213-14.
75. CONG. BUDGET OFFICE, supra note 6, at 28-31.
76. Waxman, supra note 1.
77. See, e.g., Alfred B. Engelberg, Special Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness?, 39 IDEA 389, 414-19 (1999).
78. See FED. TRADE COMM'N, supra note 39, at 1.
79. 21 U.S.C. § 355(j)(5)(B)(iii) (2006).
80. Id.
81. Lara J. Glasgow, Stretching the Limits of Intellectual Property Rights: Has the Pharmaceutical Industry Gone Too Far?, 41 IDEA 227, 233 (2001).
82. See Soehnge, supra note 23, at 73. The term "sham patent" is somewhat misleading and is not meant to imply that the U.S. Patent & Trademark Office is improperly issuing invalid patents. In this context, it is meant to refer to a patent that is filed for the purpose of engaging in "sham" litigation, i.e., litigation that is baseless and pursued only for the purpose of interfering with a competitor's business.
83. See In re Buspirone Patent & Antitrust Litig., 185 F. Supp. 2d 363, 368 (S.D.N.Y. 2002).
84. The "Orange Book" is the common name for the FDA publication Approved Drug Products with Therapeutic Equivalence Evaluations, which is published monthly. OFFICE OF GENERIC DRUGS, FOOD & DRUG ADMIN., APPROVED DRUG PRODUCTS WITH THERAPEUTIC EQUIVALENCE EVALUATIONS (2008) [hereinafter Orange Book], available at http://www.fda.gov/cder/ob/docs/preface/ecpreface.htm. The FDCA requires a patent holder to include in its NDA 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.
85. U.S.C. § 355(b)(1). The patent numbers and expiration dates are then published in the Orange Book. Process patents and certain composition of matter patents are precluded from being listed in the Orange Book, though generic manufacturers may still be sued for infringing these unlisted patents. See infra notes 99, 181 and accompanying text.
86. Brian Porter, Comment, Stopping the Practice of Authorized Generics: Mylan's Effort to Close the Gaping Black Hole in the Hatch-Waxman Act, 22 J. CONTEMP. HEALTH L. & POL'Y 177, 181 (2005).
87. Soehnge, supra note 23, at 71-72.
88. See, e.g., Mylan Pharm., Inc. v. Thompson, 268 F.3d 1323, 1330-31 (Fed. Cir. 2001).
89. Terry G. Mann, Patenting Drug Products: Anticipating Hatch-Waxman Issues During the Claims Drafting Process, 54 FOOD & DRUG L.J. 245, 250 (1999) (citing 59 Fed. Reg. 50,345 (Oct. 3, 1994)).
90. See Soehnge, supra note 23, at 72.
91. Id. (citing Glasgow, supra note 63).
92. See 21 U.S.C. § 355(j)(5)(D)(i)(VI) (2006). Recall that ANDAs for expired pioneer patents require Paragraph II certifications.
93. Id. § 355(j)(2)(A)(vii)(II);
94. see also supra note 38 and accompanying text.
95. See, e.g., Dr. Reddy's Labs., Inc. v. Thompson, 302 F. Supp. 2d 340, 350-57 (D.N.J. 2003). One practioner suggests that this structure encourages earlier challenges to drug patents, which advances the public's interest in invalidating weak patents, and that generic manufacturer can avoid this risk by submitting ANDAs earlier. E-mail from Dr. Michael Shuster, Partner, Fenwick & West LLP, to Author (Mar. 23, 2008, 18:00:40 PST) (on file with author).
96. 21 U.S.C. § 355(j)(5)(B)(iv); see also supra notes 51-53 and accompanying text.
97. 21 U.S.C. § 355(j)(5)(B)(iv).
98. See Soehnge, supra note 23, at 74.
99. Id.
100. See id.
101. See, e.g., In re Buspirone Patent Litig., 185 F. Supp. 2d 363, 365-67 (S.D.N.Y. 2002). Commentators refer to such settlements as "reverse payments" because they involve payments from the plaintiff to the defendant - i.e., from the patentee to the generic manufacturer.
102. See James C. Burling, Hatch-Waxman Patent Settlements: The Battle for a Benchmark, 20 ANTITRUST 41, 41 (2006).
103. Id. Discussions of antitrust violations are outside the scope of this Note.
104. For further discussion, see generally Fazzio, supra note 17, and Hemphill, supra note 17.
105. See Paying off Hearing, supra note 5, at 131-32 (statement of Comm'r Jon Leibowitz, Federal Trade Commission). According to the FTC, generic challengers prevail 73% of the time in litigation filed pursuant to Paragraph IV ANDAs. FED. TRADE COMM'N, supra note 39, at 13.
106. See 148 CONG. REC. S7565-66 (daily ed. July 30, 2002) (statement of Sen. Hatch) (asserting that pay-for-delay settlements were an unanticipated outcome of the Hatch-Waxman Act);
107. see also S. REP. No. 107-167, at 4 (2002) ("Agreeing with smaller rivals to delay or limit competition is an abuse of the Hatch-Waxman law....").
108. But see Burling, supra note 79, at 44 (arguing in support of reverse payments as a valid form of risk aversion by patent holders).
109. 148 CONG. REC. S7566 (daily ed. July 30, 2002) (statement of Sen. Hatch).
110. The FDA has defined "authorized generic" as "any marketing by an NDA holder or authorized by an NDA holder, including through a third-party distributor, of the drug product approved under the NDA in a manner equivalent to the marketing practices of holders of an approved ANDA for that drug." Letter from William K. Hubbard, Assoc. Comm'r for Policy and Planning, Food & Drug Admin., to Stuart A. Williams, Chief Legal Officer, Mylan Pharm., Inc., and James N. Czaban, Heller Ehrman LLP (July 2, 2004), available at http://www.fda.gov/ohrms/dockets/dailys/ 04/july04/070704/04p-0075-pdn0001.pdf.
111. See id.
112. The Pharmaceutical Research and Manufacturers of America (PhRMA) sponsored a study looking at the effect of authorized generics on drug prices. IMS CONSULTING, IMS HEALTH. ASSESSMENT OF AUTHORIZED GENERICS IN THE U.S. (2006), available at http://www.phrma.org/ files/IMS%2oAuthorized%2oGenerics%2oReport-6-22-06.pdf. The study compared drugs where an authorized generic was launched during the first ANDA applicant's 180-day exclusivity period, with drugs where no authorized generic was marketed during the exclusivity period.
113. See id. at 6-7.
114. The effect of the authorized generics on drug prices was evaluated by comparing the price difference between generic and branded drugs in both cases. Id. at 7. The study found that where no authorized generic was marketed during the exclusivity period, the generic drug sold for 23% less than the branded drug.
115. See id. at 10. But where an authorized generic was marketed during the exclusivity period, the discount between generics and the branded drug increased to 38%.
116. See id. at 9. In contrast, the Generic Pharmaceutical Association (GPhA) sponsored an identical study, which found that authorized generics had almost no effect on generic drug prices during the exclusivity period.
117. See AIDAN HOLLIS & BRIAN LIANG, AN ASSESSMENT OF THE EFFECT OF AUTHORIZED GENERICS ON CONSUMER PRICES 18 (2006), available at http://www.gphaonline.org/AM/Template.cfm?Section= Home&Template=/CM/ContentDisplay.cfm&ContentID=2647.
118. Abboud, supra note 55.
119. Agency Views on Authorized Generics a Boon to Brands, WASH. DRUG LETTER, Oct. 11, 2004, at 9.
120. Id.
121. Id. (internal quotation marks omitted).
122. See Petition from Mylan Pharm., Inc. to Food & Drug Admin., Citizen Petition No. 2004P-0075, at 2 [hereinafter Mylan Pharm. Petition] (Feb. 17, 2004), available at http://www.fda.gov/ohrms/ dockets/dailys/04/ feb04/021804/04p-0075-cp00001-vol.i.pdf.
123. FED. TRADE COMM'N, supra note 39, at i.
124. Id. at ii-viii.
125. See President George W. Bush, Remarks by the President on Prescription Drugs (Oct. 21, 2002) (proposing new FDA regulations to expedite generic drug approvals), available at http:// whitehouse.gov/news/ releases/2002/10/20021021-2.html.
126. Pub. L. No. 108-173, 117 Stat. 2066 (effective Dec. 8, 2003) (codified as amended in scattered sections of 21 and 42 U.S.C).
127. SmithKline Beecham Corp. v. Apotex Corp., 383 F. Supp. 2d 686, 691 n.3 (E.D. Pa. 2004);
128. see also 21 U.S.C. § 355(c)(3)(C) (2006).
129. Press Release, Sen. Judd Gregg, Breakthrough, Bipartisan Legislation to Make More Prescription Drugs Affordable, Available Gets Boost (Jun. 11, 2003), available at http:// www.senate.gov/~gregg/press/2003/press061103.pdf.
130. Medicare Modernization Act, § 1102(a)(2)(A) (codified as amended at 21 U.S.C. § 355(j)(5)(B)(iii) (2006));
131. see also Barry J. Marenberg, Changes to the Hatch-Waxman Act Following the "Medicare Prescription Drug, Improvement and Modernization Act of 2003," 23 BIOTECH. L. REP. 277, 277 (2004).
132. 21 C.F.R. § 314.53(b)(1) (effective Aug. 19, 2003).
133. 21 U.S.C. §355(j)(5)(B)(iv)(I) (2006). The revised Act now provides that, [i]f the [ANDA] contains a [Paragraph IV] certification... and is for a drug for which a first applicant has submitted an application containing such a certification, the application shall be made effective on the date that is one hundred and eighty days after the date of the first commercial marketing of the drug (including the commercial marketing of the listed drug) by any first applicant.
134. Id. Unlike the pre-MMA version of the Act, a court decision does not by itself start the 180-day period. Cf. 21 U.S.C. § 355(j)(5)(B)(iv)(II) (2000) (amended 2003) (permitting trigger of the 180-day period by "a decision of a court... holding the patent which is the subject of the certification to be invalid or not infringed").
135. Mylan Pharm., Inc. v. Thompson, 207 F. Supp. 2d 476, 488 (N.D.W. Va. 2001);
136. see also Erika King Lietzan, A Brief History of 180-Day Exclusivity Under the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act, 59 FOOD & DRUG L.J. 287, 304 (2004).
137. See 21 U.S.C. § 355(j)(5)(D) (2006).
138. A detailed presentation and analysis of these provisions is given in Part IV.B, infra.
139. 21 U.S.C. § 355(j)(5)(D)(i)(I).
140. Id. § 355(j)(5)(D)(i)(II)-(VI).
141. Id. § 355(j)(5)(D)(iii)(I).
142. Id. § 355(j)(5)(D)(iii)(II).
143. Id. § 355(j)(5)(C)(ii) ("If an owner of the [patent holder] brings a patent infringement action against the [ANDA] applicant, the applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder... 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."). Note that this is not an independent cause of action and can only be raised as a counterclaim.
144. Id. It is beyond the scope of this Note to provide a full analysis of this provision. But it seems unlikely that the first ANDA applicant would ever file such a counterclaim, since they would either (1) forfeit the exclusivity period by amending to a Paragraph 1 certification, or (2) trigger a forfeiture event. Exercising this counterclaim option would only be useful for later-filing applicants, who could possibly deprive the first filer of the exclusivity period by forcing the NDA holder to delist their patent from the Orange Book.
145. Medicare Modernization Act, Pub. L. No. 108-173, 117 Stat. 2066, § 1101(a), (d) (effective Dec. 8, 2003) (codified at 21 U.S.C. § 355(j)(5)(C) (2006), 35 U.S.C. § 271(e)(5) (2006)).
146. 21 U.S.C. § 355(j)(5)(C)(i); 35 U.S.C. § 271(e)(5). Despite Congress' explicit attempt to grant generic challengers declaratory judgment jurisdiction, the Federal Circuit held that such actions failed to meet the Constitution's Article III "case or controversy" requirement.
147. See Teva Pharm. USA, Inc. v. Pfizer, Inc., 395 F.3d 1324, 1334 (Fed. Cir. 2005).
148. But after the Supreme Court's decision in MedImmune v. Genentech, 127 S. Ct. 764 (2007), the Federal Circuit revised its position and now allows generic challengers to bring declaratory judgment actions even when the patent holder has granted the generic a covenant not to sue.
149. See Caraco Pharm. Labs. v. Forest Labs, 527 F.3d 1278, 1290-91 (Fed. Cir. 2008); Teva Pharm. USA v. Novartis Pharm. Corp., 482 F.3d 1330, 1340 (Fed. Cir. 2007). But recent cases suggest that declaratory judgment actions brought by later-filing ANDA applicants may fail the "case or controversy" requirement.
150. See Janssen Pharm. v. Apotex, Inc., No. 2008-1062, 2008 U.S. App. LEXIS 18822 (Fed. Cir. Sept. 4, 2008);
151. Merck & Co. v. Apotex, Inc., No. 2007-1362, 2008 U.S. App. LEXIS 15014 (Fed. Cir. July 16, 2008).
152. 21 U.S.C. § 355(j)(5)(C)(i)(III).
153. Medicare Modernization Act § 1112 (effective Dec. 8, 2003) (codified at 21 U.S.C. § 355 nt.).
154. Id. § 1112(a).
155. Id. § 1112(b).
156. 148 CONG. REC. SI 1340 (daily ed. Nov. 18, 2002) (statement of Sen. Leahy).
157. 149 CONG. REC. S15761 (daily ed. Nov. 24, 2003) (statement of Sen. Frist).
158. Id. at S15746 (statement of Sen. Schumer).
159. Marenberg, supra note 98, at 277.
160. Gerald J. Mossinghoff, Overview of the Hatch-Waxman Act and Its Impact on the Drug Development Process, 54 FOOD & DRUG L.J. 187, 190 (1999).
161. See FED. TRADE COMM'N, supra note 39, at iii.
162. See 21 U.S.C. § 355(j)(5)(D)(i)(III) (2006).
163. This example also assumes that the generic challenger could not conclude litigation before the patent expires.
164. Caffrey & Rotter, supra note II, at 23.
165. Yana Pechersky, Note, To Achieve Closure of the Hatch-Waxman Act's Loopholes, Legislative Action Is Unnecessary: Generic Manufacturers Are Able to Hold Their Own, 25 CARDOZO ARTS & ENT. L.J. 775, 796 (2007). Marketing a generic drug while related Paragraph IV litigation is pending is considered "at-risk" because the generic challenger risks liability for the pioneer's lost profits if the generic loses the patent case.
166. See id.
167. Caffrey & Rotter, supra note 11, at 23.
168. Id. at 43.
169. Medicare Modernization Act, Pub. L. No. 108-173, 117 Stat. 2066, § 1112 (effective Dec. 8, 2003) (codified at 21 U.S.C. § 355 nt. (2006)).
170. Seth Silber & Matthew Bye, Is That Everything? Antitrust Filing Obligations for Pharmaceutical Settlement Agreements, ANTITRUST COMPLIANCE BULL., Mar. 2008, at 39 (footnote omitted).
171. See BUREAU OF COMPETITION, FED. TRADE COMM'N, AGREEMENTS FILED WITH THE FEDERAL TRADE COMMISSION UNDER THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003: SUMMARY OF AGREEMENTS FILED IN FY 2007 at 2 (2008) (finding that 42% of settlement agreements between pioneers and generic manufacturers during fiscal year 2007 included some form of reverse payment).
172. See In re Ciprofloxacin Hydrochloride Antitrust Litigation, No. 2008-1097 (Fed. Cir. Oct. 15, 2008);
173. In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187 (2d Cir. 2006), cert. denied sub nom. Joblove v. Barr Labs, Inc., 127 S. Ct. 3001 (2007);
174. Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1076 (11th Cir. 2005), cert. denied, 548 U.S. 919 (2006);
175. Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294, 1304, 1312-13 (11th Cir. 2003), cert. denied, 543 U.S. 939 (2004).
176. See In re Cardizem CD Antitrust Litig., 332 F.3d 896, 908 (6th Cir. 2003), cert. denied sub nom. Andrx Pharm., Inc. v. Kroger Co., 543 U.S. 939 (2004);
177. Andrx Pharm., Inc. v. Biovail Corp. Int'l, 256 F.3d 799, 809-12 (D.C. Cir. 2001) (dicta), cert. denied, 535 U.S. 931 (2002).
178. Pechersky, supra note 125, at 795.
179. For example, the FTC recently filed suit in the D.C. District Court against Cephalon for entering into pay-for-delay settlements with four ANDA applicants. See Complaint for Injunctive Relief at 9, FTC v. Cephalon, Inc., No. 1:08-cv-00244 (D.D.C. Feb. 13, 2008). Review of any decisions from this court would go to the D.C. Circuit Court of Appeals, which is considered a sophisticated antitrust court, and possibly cause a split with the decisions of the Second and Eleventh Circuits. Client Alert, Seth Silber, Wilson Sonsini Goodrich & Rosati PC, FTC Sues Cephalon for "Reverse Payment" Patent Settlements with Four Generic Pharmaceutical Firms 4 (Feb. 19, 2008),
180. available at http://www.wsgr.com/publications/pdfsearch/ clientalert-cephalon.pdf.
181. See 21 U.S.C. § 355(j)(5)(D) (2006).
182. Id. § 355(j)(5)(D)(i)(I)(aa)(AA).
183. E-mail from Seth Silber, Of Counsel, Wilson Sonsini Goodrich & Rosati PC, to Author (Feb. 22, 2008, 06:58:04 PST) (on file with author).
184. 21 U.S.C. § 355(j)(5)(D)(i)-(ii).
185. Id. § 355(j)(5)(D)(i)(I) (emphasis added).
186. Letter from Gary J. Buehler, Dir., Office of Generic Drugs, Ctr. for Drug Evaluation and Research, to Marc A. Goshko, Executive Dir., Teva N. Am. 4 [hereinafter Buehler Letter] (Jan. 17, 2008), available at www.fda.gov/ohrms/DOCKETS/DOCKETS/07n0389/07n-0389-let0003.pdf.
187. Id. at 5.
188. Id.
189. Ironically, in light of Janssen v. Apotex, No. 2008-1062, 2008 U.S. App. LEXIS 18822 (Fed. Cir. Sept. 4, 2008), later-filing ANDA applicants are probably unable to bring declaratory judgment actions because they cannot satisfy the Article III "case or controversy" requirement.
190. See discussion supra note in. Alternatively, in response to a later-filed ANDA application, the patent holder could sue the later-filer under 35 U.S.C. § 271(e)(2)(A), initiating litigation that could lead to a finding of invalidity or noninfringement. But this is also unlikely since the pioneer loses nothing by effectively ignoring the later-filing. Even if the later-filer's ANDA is approved, it will be prevented from entering the market because of the bottleneck caused by the pioneer's pay-for-delay settlement with the first filer.
191. Buehler Letter, supra note 140, at 5 n.6.
192. Id. at 1.
193. FDA Solicits Public Comment on Yet Another 180-Day Generic Drug Exclusivity Issue, FDA Law Blog, http://www.fdalawblog.net/ (Oct. 12, 2007, 10:48 EST).
194. Statement of Jon Leibowitz, Commissioner, Fed. Trade Comm'n, Concurring in Part and Dissenting in Part in the Matter of Cephalon, Inc. 2 (Feb. 13, 2008), available at http://www.ftc.gov/os/caselist/0610182/080213comment. pdf.
195. The Hatch-Waxman Act provides that if "a previous application has been submitted," a subsequent ANDA filer must wait until 180 days after the "first commercial marketing of the drug under the previous application" or a favorable court decision, whichever is earlier. 21 U.S.C. 355(j)(5)(B)(iv) (2006). FDA regulations have interpreted this language to mean that the only "previous" application that triggers the 180-day delay is the first application. See 180-Day Generic Drug Exclusivity for Abbreviated New Drug Applications, 64 Fed. Reg. 42,873,42,874 (Aug. 6, 1999).
196. 21 U.S.C. § 355(j)(5)(D)(iii) (stating that if the first applicant withdraws, "no applicant shall be eligible").
197. See Erika Lietzan & David E. Korn, Issues in the Interpretation of 180-Day Exclusivity, 62 FOOD & DRUG L.J. 49, 72 (2007).
198. Ashlee B. Mehl, Note, The Hatch-Waxman Act and Market Exclusivity for Generic Drug Manufacturers: An Entitlement or an Incentive?, 81 CHI.-KENT L. REV. 649, 674 (2006).
199. Caffrey & Rotter, supra note 11, at 40.
200. This solution has been proposed in legislation. See Preserve Access to Affordable Generics Act, S. 316, 110th Cong. § 3(2) (2007) (barring settlement agreements if the "ANDA filer receives anything of value" and in exchange "agrees not to research, develop, manufacture, market, or sell the ANDA product for any period of time").
201. Caffrey & Rotter, supra note 11, at 40-41.
202. See Silber & Bye, supra note 129.
203. See supra notes 131-32 and accompanying text.
204. See generally, e.g., Sheila Kadura, Note, Is an Absolute Ban on Reverse Payments the Appropriate Way to Prevent Anticompetitive Agreements Between Branded- and Generic-Pharmaceutical Companies?, 86 TEX. L. REV. 647 (2008).
205. In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 206-07 (2d Cir. 2006).
206. Gardiner Harris & Joanna Slater, Bitter Pills: Drug Makers See 'Branded Generics' Eating into Profits, WALL ST. J., Apr. 17, 2003, at A1 ("[T]he average profit over the life of a drug following a successful court case can be more than 10 times the cost of litigation." (quoting the president of generic manufacturer Dr. Reddy's Laboratories)).
207. Kent S. Bernard & Willard K. Tom, Antitrust Treatment of Pharmaceutical Patent Settlements: The Need for Context and Fidelity to First Principles, 15 FED. CIR. B.J. 617, 631 (2006).
208. See Kadura, supra note 157, at 659-60. But a recent case may change the calculus generics use when determining whether to file a Paragraph IV challenge. A recent district court ruling required two generic companies to pay a pioneer's attorney fees because they filed baseless Paragraph IV challenges in violation of their "duty of care" under the Hatch-Waxman Act.
209. See Takeda Chem. Indus, v. Mylan Labs., Inc., 459 F. Supp. 2d 227, 230-31 (S.D.N.Y. 2006). The case is cunently on appeal to the Federal Circuit, in which the Generic Pharmaceutical Association (GPhA) filed an amicus brief arguing that "[r]eversal is vital because this aspect of the district court's ruling will undermine the efficacy of the Hatch-Waxman scheme by deterring future ANDA filings by many companies, keeping generic drugs off the market and increasing the cost of drugs to the consumers who depend on them." Brief for the Generic Pharm.
210. Ass'n as Amici Curiae Supporting Appellants at 7, Takeda Chem. Indus, v. Mylan Labs., Inc., Nos. 2007-1269, 2007-1270 (Fed. Cir. Feb. 21, 2008). If the decision is upheld on appeal, it may serve to thwart potential generic competitors with weak cases.
211. See Teva Pharm. Indus., Ltd. v. Crawford, 410 F.3d 51, 55 (D.C. Cir. 2005).
212. A citizen petition is a petition that any person may submit to the FDA to request the FDA Commissioner to "issue, amend, or revoke" a regulation or order, or to request the Commissioner to "take or refrain from taking any other form of administrative action." 21 CF.R. § 10.30 (2008).
213. Mylan Pharm. Petition, supra note 91; Petition from Teva Pharm. U.S., Inc. to Food & Drug Admin., Citizen Petition No. 2004P-0261 (June 9, 2004), available at http://www.fda.gov/ohrms/dockets/dailys/04/June04/ 061004/04p-0261-cp00001-01-vol1.pdf.
214. Letter from William K. Hubbard, Assoc. Comm'r for Policy and Planning, Food & Drug Admin., to Stuart A. Williams, Chief Legal Officer, Mylan Pharm., Inc., and James N. Czaban, Heller Ehrman LLP (July 2, 2004), available at http://www.fda.gov/ohrms/dockets/dailys/04/july04/070704/ 04p-0075-pdn0001.pdf.
215. Teva Pharm. Indus, v. FDA, 355 F. Supp. 2d 111, 119 (D.D.C. 2004); Mylan Pharm., Inc. v. FDA, No. 1:04cv174 (N.D.W. Va. Aug. 30, 2004) (notice of voluntary dismissal without prejudice).
216. Mylan Pharm., Inc. v. FDA, 454F.3d 270, 276-77 (4th Cir. 2006); Teva Pharm. Indus., Ltd. v. Crawford, 410 F.3d 51, 55 (D.C. Cir. 2005).
217. Petition from Mylan Pharm., Inc. to Food & Drug Admin., supra note 39, at 2.
218. Chen, supra note 34, at 511-12.
219. Abbott Labs. v. Young, 920 F.2d 984, 991 (D.C. Cir. 1990); see also H.R. REP. No. 98-857, pt. 1, at 14-15 (1984).
220. Chen, supra note 34, at 469.
221. See Notice of Authorized Generic Drug Study, 71 Fed. Reg. 16,779, 16,780 (Apr. 4, 2006), available at http://www.ftc.gov/os/2006/03/ P062105AuthorizedGenericDrugStudyFRNotice.pdf.
222. In depth analysis of this issue is beyond the scope of this Note. But see Chen, supra note 34, at 478. Chen argues that the authorized generic practice clearly harms competition.
223. See id. Since authorized generics generally enter the market before the ANDA applicant's equivalent, the authorized generic will gain the "first mover" advantage and the ANDA applicant will be burdened with the "switching costs" of late entry.
224. Id. at 478-79. "Because second place is only marginally better but immensely more expensive than third place, there is no incentive to bear the risks and costs of a pre-expiration patent challenge. The result is that rational generic firms may forego potential Paragraph IV challenges when faced with this unfavorable cost-benefit calculus."
225. Id. at 479.
226. 21 U.S.C. § 355(j)(5)(D)(i)(I)(bb)(AA) (2006) (emphasis added).
227. Interview with Seth Silber, Of Counsel, Wilson Sonsini Goodrich & Rosati PC, in Wash., D.C. (Feb. 21, 2008).
228. Id.
229. See Kimberly A. Moore, Markman Eight Years Later: Is Claim Construction More Predictable?, 9 LEWIS & CLARK L. REV. 231, 234-36 (2005) (reviewing empirical studies showing that the Federal Circuit overturns 25-50% of district court claims construction decisions);
230. see also Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1476 (Fed. Cir. 1998) (en banc) (Judge Rader asserting that the Federal Circuit had overturned 40% of district court claims construction decisions).
231. Interview with Seth Silber, supra note 175.
232. See Lietzan & Korn, supra note 150, at 67-69.
233. 21 C.F.R. § 314.94(a)(12)(viii)(B) (2008). Recall that Paragraph I AND As are used when the pioneer's drug is not patented or no patent information has been filed with the FDA. 21 U.S.C. § 355(j)(2)(A)(vii)(I) (2006);
234. see also supra note 38 and accompanying text.
235. It is beyond the scope of this Note to analyze the issues related to manipulation of the Orange Book by NDA holders. The Author's understanding is that if a pioneer's patent is not listed in the Orange Book, the pioneer can only avail itself of normal infringement actions under 35 U.S.C. § 271 of the Patent Act. But if the pioneer's patent is listed in the Orange Book, then it can take advantage of the Hatch-Waxman provisions, such as the thirty-month stay, etc. See generally Natalie M. Derzko, The Impact of Recent Reforms of the Hatch-Waxman Scheme on Orange Book Strategic Behavior and Pharmaceutical Innovation, 45 IDEA 165 (2005).
236. See FED. TRADE COMM'N, supra note 39, at vii.
237. 21 U.S.C. § 355(j)(5)(D)(i)(I)(bb)(CC) (stating that the exclusivity period is forfeited seventyfive days after "[t]he patent information submitted under subsection (b) or (c) is withdrawn by the [NDA] holder").
238. 469 F.3d 120, 125 (D.C. Cir. 2006); FDA Solicits Comments on 180-Day Exclusivity Forfeiture & Orange Book Patent "Delisting" Issues, FDA Law Blog, http://www.fdalawblog.net/ (Sept. 26, 2007, 01:36 EST).
239. Ranbaxy, 469 F-3d at 126 (emphasis added); Kurt R. Karst, Teva Sues FDA After the Agency Refuses to Relist RISPERDAL Patent and Recognize the Company's 180-Day Exclusivity Eligibility, FDA Law Blog, http://www.fdalawblog. net/ (Mar. 7, 2008, 08:06 EST).
240. Letter from Gary J. Buehler, Dir., Office of Generic Drugs, Ctr. for Drug Evaluation and Research, to Anonymous ANDA Applicant (Sept. 26, 2007), available at http://www.fda.gov/ohrms/dockets/dockets/07no417/07n-0417- let0001-vol1.pdf [hereinafter Buehler, FDA Letter to Cobalt 2007].
241. Id.
242. Letter from Gary J. Buehler, Dir., Office of Generic Drugs, Ctr. for Drug Evaluation and Research, to William A. Rakoczy, Rakoczy, Molino, Mazzochi & Siwik LLP, at 12 (May 7, 2008), available at http://www.regulations.gov/ fdmspublic/ContentViewer?objectId=090000648055265c&disposition= attachment&contemType=pdf [hereinafter Buehler, FDA Letter to Cobalt 2008];
243. see also Kurt R. Karst, FDA Determines that Cobalt Forfeited 180-Day Exclusivity for Generic PRECOSE; Agency is Sued Yet Another Time, FDA Law Blog, http://www.fdalawblog.net/ (May 11, 2008, 07:58 EST).
244. Note that as of September 26, 2007, Cobalt's ANDA had not yet been approved. Buhler, FDA Letter to Cobalt 2007, supra note 186. On that day, FDA sent a letter to Cobalt soliciting its opinion on whether it was permissible for the FDA to delist Bayer's patent because more than thirty months had passed since Cobalt's first filing and it had failed to enter the market.
245. Id. In applying the forfeiture provisions, the FDA found the "earlier of date under subpart (aa) was September 22, 2007 (thirty months after the ANDA was filed).
246. Buehler, FDA Letter to Cobalt 2008, supra, at 6. Similarly, the "later of date under subpart (bb) was June 30, 2007 (seventy-five days after Bayer delisted its patent).
247. Id. at 7. Therefore, Cobalt forfeited their exclusivity as of September 22, 2007, the "later of date under 21 U.S.C. §355 (j)(5)(D)(i)(I).
248. Id. at 7-8;
249. see also supra notes 138-41 and accompanying text.
250. Buehler, FDA Letter to Cobalt 2008, supra note 188, at 8 ("[T]he Ranbaxy court noted that the decisions rendered by the FDA and the district court had been made pursuant to the Act 'as it stood before the MMA and, because the MMA was not made retroactive... this decision is also geared to the Act pre-MMA.'"
251. (citing Ranbaxy Labs. Ltd. v. Leavitt, 469 F.3d 120, 122 (D.C. Cir. 2006))).
252. Complaint at 2, Cobalt Labs. Inc. v. FDA, No. 1:08-cv-00798-RBW (D.D.C. May 8, 2008).
253. See generally Robert P. Reznick & James B. Kobak, Jr., Authorized Generics: Still Legal-and Holding, PHARM. EXEC., Sept. 1, 2006.