Orange Book Blog

FTC Files Supplemental Brief in FTC v. Schering, in Supreme Court

The FTC last week filed a supplemental brief in the Supreme Court, in response to the Solicitor General's brief, in FTC v. Schering.  The case involves the legality of "reverse payment" settlements--those from an innovator drug company to a generic drug company--in Hatch-Waxman cases.  The Solicitor General, whose views on the case were requested by the Supreme Court, argued in his brief last month that the Court should deny FTC's petition for certiorari.  Now, in its supplemental brief, the FTC takes issue with many of the Solicitor General's arguments.

The FTC argues forcefully that the Solicitor General failed to appreciate the practical effects of allowing reverse payment settlements of Hatch-Waxman litigation.  According to the FTC, "the economic impact of the ruling below on consumers of prescription drugs--including the States--is staggering.  Indeed, billions of dollars in added prescription drug costs annually are at stake."

Nevertheless, the FTC seems to acknowledge the Solicitor General's point that other reverse payment cases may be more appropriate for Supreme Court review.  In a footnote in its Supplemental Brief, the FTC states:  "In light of the pendency of the petition for rehearing in Tamoxifen [in the 2nd Circuit], and the possibility of the filing of a petition for certiorari in that case, the Court may wish to hold the present case pending final resolution of that case."  Links to the briefs in the Tamoxifen case are provided below.

RELATED READING:

• 19 June 06 ABA Antitrust Section IP Committee E-Bulletin
• 16 June 06 SCOTUSblog post on the new FTC brief
• 19 May 06 Orange Book Blog post, including links to all the briefs
• petition for panel rehearing in the Tamoxifen case
• brief in opposition to panel rehearing in Tamoxifen
• amicus brief of AARP in Tamoxifen, in support of rehearing
• amicus brief of FTC in Tamoxifen, in support of rehearing
• amicus brief of GPhA in Tamoxifen, in opposition to rehearing

Supreme Court Denies Certiorari in SKB v. Apotex

Following the Solicitor General's advice, the Supreme Court today denied SmithKline Beecham's petition for certiorari in SKB v. Apotex, No. 05-489.  The issue presented was whether inherent anticipation occurs only when one of skill in the art recognizes the prior creation of the invention.  The Federal Circuit had held that inherent anticipation may occur regardless of such recognition.

The case concerns Apotex's application to market a generic version of Paxil.  Apotex has been on the market with its generic Paxil since 2004.

RELATED READING:

• 19 June 06 Bloomberg story
• 23 May 06 Orange Book Blog post, including links to all the briefs

SDNY: Orange Book Listing Does Not Provide Notice Under Patent Marking Statute

In a case of first impression, the U.S. District Court for the Southern District of New York held, on cross motions for summary judgment regarding available remedies, that an Orange Book listing of patents protecting an approved drug was not effective public notice under the patent marking statute, 35 U.S.C. 287(a).  Merck & Co. v. Mediplan Health Consulting, No. 05 Civ. 3650 (S.D.N.Y. June 14, 2006).  As a result, the damages available to Merck were limited to those accruing after the date on which the lawsuit was filed, rather than those accruing after the date on which Merck listed the patent in suit in the Orange Book.

The case involves Mediplan's operation of an on-line Canadian pharmacy that offered a generic version of Zocor (simvastatin) for sale to U.S. customers, prior to expiration of Merck's simvastatin patents.  Mediplan apparently did not file an ANDA, as is required for FDA approval of generic drugs in the U.S.  Merck sued Mediplan for infringement of U.S. Patent No. 4,444,784, which included both composition and method claims to simvastatin.  As required under the Hatch-Waxman Act, Merck listed the '784 patent in the Orange Book.

It was undisputed at trial that Merck failed to "mark" its Zocor product, as called for by 35 U.S.C. 287(a).  Merck asserted only the method of use claims against Mediplan, and argued that it was not required to comply with the marking requirement, which does not apply to patents for only a method or process, since no physical item exists to be marked.  The court held that marking is required where the patent includes both composition and method claims, even if only the method claims are asserted.

The court then turned to Merck's argument that its Orange Book listing served as effective public notice under the marking statute.  The court noted the lack of precedent in the case, and proceeded to focus its analysis on the judicial interpretation of the marking statute as requiring a specific infringement charge against a specific product, and that general statements to the industry about the patent's existence do not meet this standard.  The court, finding that the Orange Book "is merely a catalog that informs the public of the patent's existence," held as a matter of law that Orange Book listing of the simvastatin patents was not adequate notice under the marking statute.

In rebutting Merck's arguments that the Orange Book is not just a generalized warning, the court noted that Merck did not send a copy of the relevant listing to Mediplan, or reference Mediplan or their products.  The court rebuffed Merck's policy arguments, as beyond the appropriate inquiry of the court.

The court's ruling is sure to raise eyebrows.  Orange Book listing of patents covering an FDA-approved drug is required under federal law.  The listing regulations make clear that the drug maker can list only those patents on which it could reasonably sue a third party for patent infringement for making or using the drug without the drug maker's approval.  Generic drug manufacturers seeking to gain FDA approval to market a generic version of an FDA-approved drug are required to make a certification with respect to patents listed in the Orange Book for the relevant FDA-approved drug.

Thus, any generic manufacturer operating within federal law is required to consult the Orange Book prior to filing its ANDA to determine whether its manufacture of a specific drug is likely to result in patent infringement, and will identify the relevant listed patents.  This certainly would appear to provide notice of the existence of patents covering the drug, as required under the patent marking statute.  It is not clear why a generic manufacturer operating outside the federal scheme for generic drug approval, like Mediplan in this case, should benefit by avoiding review of the Orange Book listings for drugs they intend to market in the United States.

Merck and Integra Submit Post-Hearing Letters to Federal Circuit, Urging the Court Not to Address Research Tools Issue

As reported in a post last week, the Federal Circuit recently heard oral arguments in Merck KGaA v. Integra LifeSciences following remand from the Supreme Court.  Since the hearing, both Merck and Integra have submitted letters to the Federal Circuit, urging the court not to decide the issue of whether Merck's use of Integra's patented compounds fell outside the 271(e)(1) FDA exemption as "research tools," in which case Merck would be liable for patent infringement.

Merck asserted in its letter that a Federal Circuit decision based on the research tool issue would be improper because Integra never argued--in the district court, Federal Circuit, or Supreme Court--that the jury verdict for Integra should be sustained on the basis that Merck used Integra's patented compounds as research tools.  Integra, in its own letter, agreed with Merck, stating that while the research tool question is extremely important, it should be answered in a case in which the issue has been "squarely raised and thoroughly vetted" in the trial court.

At oral argument, Judge Rader, in particular, seemed gung ho to remand the case to the district court to determine whether Merck used Integra's compounds as research tools and therefore was not entitled to the 271(e)(1) FDA exemption.  If the other two members of the panel, Judges Newman and Prost, follow the parties' advice and ignore that issue, then the Federal Circuit will limit its opinion to the narrower technical question of whether Merck's JMOL motion was properly denied by the district court.

NOTE:  Thanks to Dennis Crouch for providing the parties' letters!

Barr Labs Pays $22.5 Million to Sandoz to Settle Antitrust Case Involving Warfarin

Barr Labs announced today in a press release that it has paid $22.5 million to settle antitrust claims brought in 1998 by Invamed and Apothecon, both of which are subsidiaries of Sandoz.  The settlement comes on the same day that a trial in the case was scheduled to begin in the Southern District of New York.

The plaintiffs' allegations stem from a 1995 exclusive supply agreement between Barr and ACIC/Brantford for clathrate, the primary raw material used to make warfarin.  According to the plaintiffs, the agreement delayed their market entry for 16 months because ACIC/Brantford was the only supplier of clathrate at the time.  Because of the agreement Barr was able to launch its generic warfarin product before the plaintiffs, and locked up much of the market as the first mover.

In May 2002, the district court (Sweet, J.) granted summary judgment to Barr on the plaintiffs' antitrust claims of monopolization.  However, the court also held that the plaintiffs could proceed to trial on their state law claims of tortious interference with contract.  In October 2004, the Second Circuit reversed the district court's grant of summary judgment, holding that the plaintiffs' antitrust claims should also be heard.

RELATED READING:

• BNA article on the Second Circuit decision
• 14 June 06 FDANews article

FTC Publishes Public Comments on its Authorized Generics Study

The FTC has begun posting public comments relating to its proposed authorized generics study on its website.  The public comment period ended Monday.

In addition to the comment by the Ohio Public Employees Retirement System, available on the FTC website, a helpful reader provided comments from the following consumer and public interest groups:

• AAI, CFA, FUSA, and US PIRG
• AARP
• PAL

All of the comments made available so far encourage the FTC to proceed with its study, and even to broaden the study's scope to investigate other allegedly anticompetitive practices in the pharmaceutical industry.

The FTC is expected to update its website by posting additional comments in the coming days and weeks.  The FTC plans to complete its study in 2007.

RELATED READING:

• Interesting article in this month's Regulatory Affairs Focus, discussing the effects of the Deficit Reduction Act of 2005 on the practice of authorized generics
• 10 May 06 Orange Book Blog post on authorized generics

Federal Circuit Hears Oral Arguments in Integra v. Merck, After Remand from Supreme Court

A Federal Circuit panel of Judges Newman, Rader, and Prost heard oral arguments Monday in Integra LifeSciences v. Merck KGaA, No. 02-1052.  An mp3 audio file of the 45-minute session is available here (be patient when downloading this; it's a 40 mB file).

The case involves the scope of the "FDA exemption" under 35 U.S.C. 271(e)(1), which exempts activities "reasonably related to the development and submission of information" to the FDA from charges of patent infringement.  Last year, the Supreme Court reversed the Federal Circuit's earlier decision in the case, and remanded it to the Federal Circuit for further proceedings.  The Supreme Court held that the FDA exemption "extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA," including all clinical and preclinical studies of patented compounds appropriate for submission to the FDA.

At this stage of the proceedings, Merck stated the issue as follows:

The Supreme Court has now clarified that the FDA exemption immunizes an experiment from patent infringement claims where (1) it is reasonable for a scientist to believe that a drug candidate "may work through a particular biological process, to produce a particular physiological effect"; and (2) the experiment "uses the compound in research that, if successful, would be appropriate to include in a submission to the FDA."  There is no dispute that, by the time Scripps scientists conducted the accused experiments at issue here, Merck and Scripps had discovered that the accused compounds shrank tumors in animals, and that every accused experiment was reasonably designed to yield data on topics that the Supreme Court has confirmed are relevant to the FDA.  Should judgment be entered as a matter of law?

The oral arguments grew heated early, with intense questioning by Judge Rader focusing on whether "research tools" are protected by the FDA exemption under the Supreme Court's decision.  Judge Rader called this the "central issue we're going to be dealing with here."  Merck's attorney tried to refocus the court on whether Merck's specific experiments with Integra's patented compounds are entitled to the FDA exemption (arguing they are), saying, "I've only got 10 more minutes."  But Judge Rader would have none of it, replying, "You're going to spend them on this issue, so you might as well get used to it."

The question whether research tools fall under the FDA exemption is especially important to small biotechnology companies.  The Supreme Court decision left this question unanswered.

RELATED READING:

• Dennis Crouch's Patently-O post on the Supreme Court decision
• Brief of Merck KGaA
• Brief of Integra LifeSciences
• Reply brief of Merck KGaA
• Amicus brief of Bavarian Nordic A/S
• Amicus brief of Consumer Project on Technology, Electronic Frontier Foundation, and Public Knowledge
• Amicus brief of D.C. Bar Association

Teva's Victory Over Apotex in Fight for Generic Pravachol Exclusivity Survives Appeal

The Court of Appeals for the D.C. Circuit today upheld an FDA rule stating that a district court order dismissing a patent suit for lack of subject matter jurisdiction is not a "court decision" under the Hatch-Waxman Act, and is therefore insufficient to trigger the first ANDA filer's 180-day exclusivity period.  The case is Apotex v. FDA, No. 06-5105 (D.C. Cir. June 6, 2006).

This case has a long and winding history.  According to the court's opinion (which was filed per curium), Apotex first initiated a separate lawsuit in order to sabotage Teva's 180-day exclusivity period for a generic version of BMS's Pravachol:

Teva filed the first ANDA to market a generic version of Pravachol . . . .  BMS's patent on the Pravachol molecule expired on April 20, 2006, at which point Teva expected to roll out its product and take advantage of its 180-day exclusivity period.  But one of Teva's competitors had other plans.  In an effort to trigger Teva's 180-day exclusivity period long before Teva could market its generic product, Apotex, Inc., appellant herein, filed suit against BMS in the Southern District of New York in October 2003 seeking a declaratory judgment that its own generic version of Pravachol did not violate various BMS patents.  . . .  BMS and Apotex ultimately resolved the dispute by agreeing to a "stipulation and order" stating that BMS had no intention of suing Apotex and that the complaint should be dismissed "for lack of subject matter jurisdiction."

Apotex then asked the FDA whether the signed stipulation and order triggered Teva's 180-day exclusivity period for generic Pravachol.  The FDA answered "yes," based on the D.C. Circuit's holdings in two previous cases, Teva I and Teva II.  Teva's 180-day exclusivity period had therefore long since expired.  Teva responded by filing suit against the FDA.  In Teva III, the court held that "FDA mistakenly thought itself bound by our decisions" and that its "error rendered its decision arbitrary and capricious."

On remand from Teva III, the FDA reversed itself, finding Apotex's "stipulation and order" insufficient to trigger Teva's 180-day exclusivity.  Justifying this reversal, it re-adopted its earlier rule (challenged in Teva I and Teva II) that a triggering "court decision" must include an "actual 'holding' . . . evidenced by language on the face of the court's decision showing that the determination of invalidity, noninfringement, or unenforceability has been made by the court."  According to the D.C. Circuit, "Given the vagaries of patent law and FDA's lack of expertise in patent matters, the agency explained that inquiring into the estoppel effects of representations embodied in district court opinions would spawn litigation and lead to unpredictability in the marketplace."

Apotex then filed this lawsuit, challenging FDA's decision in Teva III as arbitrary and capricious, and the district court granted Teva's motion to intervene.  Apotex then moved for a temporary restraining order and a preliminary injunction forbidding FDA from allowing Teva to begin exclusive marketing of a generic version of Pravachol.  The district court denied the motion (click here for opinion), reasoning that Apotex had no chance of prevailing on the merits.  Apotex then appealed to the D.C. Circuit, which today summarily affirmed the district court's refusal to grant the preliminary injunction.

In affirming the lower court, and upholding the FDA rule established in Teva III, the D.C. Circuit rejected Apotex's argument that "FDA's decision merely regurgitates the same tired explanations and rationales that this Court previously rejected" in Teva II.  Instead, the court found that the FDA offered a better justification for its rule than it had previously, in Teva I and Teva II.  According to the court, whereas the FDA had previously justified its rule on the basis that FDA had insufficient resources to inquire into the legal effects of settlements, the FDA this time thoughtfully reasoned that an FDA inquiry into a court-ordered dismissal of a patent suit would be fraught with uncertainty.

The court explained:  "FDA is indisputably correct that equitable estoppel in the patent law context rarely presents pure issues of law amenable to easy resolution.  . . .  We have little doubt that applying this standard would force FDA, an agency lacking patent law expertise, to resolve borderline questions about the estoppel effects of patent-holder declarations."  The court continued:

As FDA sees it, the uncertainty inherent in an estoppel-based inquiry would lead to two inter-related problems, neither of which relates to the drain-on-resources rationale set forth . . . in Teva II.  First, FDA believes that the uncertainty would "undermine marketplace certainty and interfere with business planning and investment."  And second, FDA worries that forcing it to parse court decisions will invite fruitless litigation from generic drug manufacturers seeking to trigger, or to avoid triggering, exclusivity periods.

The D.C. Circuit concluded:  "In our view, these perfectly reasonable propositions adequately support FDA's position that an estoppel-based approach to the court decision trigger is ill-advised."  The court also quickly disposed of three other arguments Apotex had offered against the FDA rule.

Teva began shipping its generic Pravachol drug products in April, after the district court denied Apotex's motion for a TRO and preliminary injunction.  Teva's 180-day generic exclusivity period is set to expire in October.  Having now lost its appeal, it is unclear whether Apotex will press forward with the case in the district court.

Thanks very much to Kurt Karst for providing a copy of today's D.C. Circuit opinion.

RELATED READING:

• 07-June-06 FDANews article
• October, 2005 Paragraph Four Report article

FDA Releases Omnitrope Citizen Petition Response

Last Tuesday, on the same day the FDA approved Sandoz's application for Omnitrope, a recombinant human growth hormone (rhGH) that Sandoz is calling the first-ever "biogeneric" drug, the FDA also released a 53-page response to a series of citizen petitions that had opposed FDA approval of Omnitrope.  Consistent with its approval of Sandoz's Omnitrope application, the FDA denied the citizen petitions.  Sandoz filed its application for Omnitrope in 2003; the citizen petitions were filed by Pfizer, Genentech, and the Biotechnology Industrial Organization (BIO) in 2003 and 2004.

The citizen petitions primarily objected to Sandoz's reliance on the FDA's finding of safety and effectiveness of Genotropin, Pfizer's rhGH, which is approved for the same indications that Sandoz sought for Omnitrope (pediatric and adult growth hormone deficiencies).  The BIO petition went a bit further, requesting the FDA to refuse any application for a therapeutic protein product that relies on information contained in another approved application.

Sandoz filed its application for Omnitrope approval under section 505(b)(2) of the FFDCA, which allows for NDA's containing full reports of safety and effectiveness in which at least some of the information required for approval comes from non-applicant studies and for which the applicant has not obtained a right of reference.  505(b)(2) applications are sometimes also referred to as "paper NDA's." 

The FDA has interpreted this section to mean that a 505(b)(2) NDA applicant can rely on published literature that describes the study result, or on a reference to FDA's finding of safety and effectiveness of a previously approved drug, provided such reliance is scientifically justified and the 505(b)(2) applicant complies with the applicable statutory requirements regarding patent certification.

Among other arguments, the citizen petitions asserted that it was not scientifically justifiable to find that Omnitrope and Genotropin were similar enough to satisfy the requirements of section 505(b)(2), and that the only possible way to compare the two drugs to find such similarly would be to access Pfizer's proprietary information submitted in the Genotropin NDA, in order to assess manufacturing differences between the two rhGH's.

In denying the citizen petitions, the FDA found that Sandoz had provided adequate data, including Sandoz's own clinical trial data, to establish that its reliance on the FDA finding of safety and effectiveness for Genotropin was justified without the need to access any proprietary Pfizer information.  This finding was made, in spite of acknowledged manufacturing differences between Omnitrope and Genotropin, based on the highly similar nature of the end products, which the FDA characterized as "relatively simple recombinant proteins." It appears this statement is based on the fact that Omnitrope is a non-glycosylated recombinant protein.  Thus, glycosylated recombinant proteins may face stricter FDA scrutiny under 505(b)(2).

Thanks very much to a helpful reader for sending us a copy of the FDA citizen petition response!

RELATED READING:

• Pfizer's citizen petition and related comments are available here
• Genentech's citizen petition and related comments are available here
• BIO's citizen petition and related comments are available here
• Comments relating to FDA's public workshop on biogenerics are here

FDA Approves First Biogeneric Drug--Or Does It?

Sandoz announced Wednesday that the FDA has approved Omnitrope, Sandoz's recombinant human growth hormone drug product.  According to Sandoz's press release, the FDA approval is "precedent-setting" because Omnitrope is the first "follow-on version of a previously approved recombinant biotechnology drug" (or "biogeneric").  Omnitrope is similar to Pfizer's Genotropin.

The FDA, however, disputes Sandoz's claim.  According to a FDA Question and Answer sheet released on Tuesday, Omnitrope is not a generic biologic because it "is not rated as therapeutically equivalent to (and therefore substitutable for) any of the other approved human growth hormone products."  The Q&A sheet states, "Omnitrope is more appropriately characterized as a 'follow-on protein product,'" several of which have previously been approved by the FDA.

Moreover, according to the FDA, the approval of Omnitrope does NOT create a new pathway for biogenerics.  The agency states:  "There is no abbreviated approval pathway analogous to 505(b)(2) or 505(j) of the [Food, Drug, and Cosmetic] Act for protein products."  The FDA believes that such approval would require new legislation.

FDA approval of Omnitrope follows an April 10, 2006, decision by the U.S. District Court for the District of Columbia requiring the FDA to make a decision on Sandoz's Omnitrope application, which had been held up for years.

GPhA, the trade group representing generic drug makers, released a statement hailing the FDA's decision to approve Omnitrope, though PhRMA, the trade group representing innovator drug companies, released no statement one way or the other.

RELATED READING:

• 31 May 06 Washington Post article