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

Comments

[sheetal chopra]

Dear sir

It is highly appriciable that your orenge book blog site is very.

You are requested to pls. clarify following:

1. Is there some site available from where we can get district court decisions free of cost. We can easily get the decisions of court of appeals from fedcir.gov BUT i do not have any idea regarding availability of district court decisions.

2. With reference to a recent case "Apotex V. FDA" I wish to ask that

- If Teva was the Ist to file ANDA which got approval also then how come Apotex filed a declaratory judgement. B/s unless Teva markets the drug for 180 days no other company shall be able to sell its generic version even if it gets declaratory judgement.Then whatwas the advantage to apotex in filing declaratory judgement and how can this type of declaratory judgement can trigger 180 day exclusivity?

It will be grat if you please clarify my queries.

Regards
sheetal

[Aaron]

Sheetal, thanks for your comment.

1. the best place to access district court filings, including opinions, is on PACER: http://pacer.psc.uscourts.gov/.

2. According to the D.C. Circuit, Apotex filed a declaratory judgment action in order to start the clock running on Teva's 180-day exclusivity period before Teva was even ready to launch its product. It's not true that "unles Teva markets the drug for 180 days no other company shall be able to sell its generic version." Rather, a "court decision" can also start the 180-day clock. Apotex hoped to start the clock and be ready to market its own generic Pravachol after the 180 days had elapsed, and that Teva still wouldn't have been ready to launch its own product at that time. That way, Apotex would have been the first to market.