Socially distant generic litigation: How COVID could slow FDA approvals

Generic drug approval applications that rely on the Paragraph IV certification process to invalidate patents may experience delays as courts contend with COVID-19 delays. What might this mean for litigants and approvals?

 

By Aaron Badida, JD

Background

When Congress passed the Drug Price Competition and Patent Term Restoration Act of 1984 (better known as the Hatch-Waxman Amendments), one of its goals was to strike a balance between encouraging generic drug competition to make drugs more affordable and protecting intellectual property to encourage new development.

 

Hatch-Waxman created the Abbreviated New Drug Application (ANDA) pathway for generics, along with a slew of associated requirements. For example, a generic drug company needs to show that its generic is bioequivalent to the Reference Listed Drug (RLD)—i.e., the brand name drug to which it intends to be generic—and that the drug is legally able to be approved and not protected by patent.

 

One of the most important barriers to entry for a prospective generic drug applicants is the existence—or absence—of a patent covering the brand name drug. If the product is no longer protected by any periods of patent (or marketing) exclusivity, the product will generally find it relatively simple to obtain approval. However, if a patent is present, the ANDA sponsor must determine if it is better to wait for the patent to expire or to challenge the validity of the patent.

 

Under the Hatch-Waxman statute, an applicant can avail themselves of four different certification pathways with regard to the patent of the RLD.

  • Paragraph I certification: This type of certification would require the generic applicant to show that the patent was never filed, and the FDA can approve the ANDA at its discretion quickly.

  • Paragraph II certification: Similar to paragraph one, this type of statement says that the patent has expired, making it easy for the ANDA to check the box on patent protection in its application.

  • Paragraph III certification: When the NDA holder’s patent expires, the FDA can approve the ANDA. The FDA may provide “tentative” approvals to ANDAs in the meantime allowing them to be marketed soon after a patent expires.

The Paragraph IV certification (21 CFR 314.95) process is slightly more complicated, in that it allows an ANDA petitioner to apply for generic approval prior to patent expiration. The certification can succeed for a few different reasons. First, the ANDA seeker can attempt to show that an NDA holder’s patent is invalid or unenforceable, which can occur for various reasons, ranging from errors in the patent application or a product’s lack of novelty.

Alternatively, the application can show that an NDA holder’s patent would not be infringed by the ANDA, which could mean that the ANDA differs enough (though not in its therapeutic equivalence) to allow for its approval. This might happen if certain parts of or processes used to make the original drug are covered by a patent.

One exception to any form patent certification is a late-listed patent. When a drug-maker receives approval for their NDA, they have 30 days to submit the patent for listing in the FDA’s Orange Book using Form FDA 3542 or 3542a. If they fail to do so, an ANDA sponsor doesn’t have file any paragraph certifications, and the patent is “late listed.” But, an ANDA can still challenge a late listed patent through Paragraph IV certification.

(Note that there is also the Section VIII route, under which an ANDA can seek approval for a use not covered by the original patent.)

 

If an ANDA seeker chooses the Paragraph IV pathway, it then notifies the RLD patent holder, who can sue within 45 days of receiving that notice. If the patent holder does choose to sue, this triggers a 30-month stay on the FDA’s approval of an ANDA (21 USC 355(b)(3)). The parties then settle whether the ANDA seeker’s paragraph IV certification is valid on the grounds asserted—either between themselves or (often) through legislation in federal court.

 

Context

The Paragraph IV pathway is important to drug companies because it offers generics an opportunity to get on the market more quickly—though not without a fight. New drugs that have never before been approved by the FDA are eligible to receive five years of marketing exclusivity (or more, such as in the case of a drug for a rare disease), during which time the FDA may not approve a generic of the same drug for the same condition. But additional patents on a product may protect a product’s market position for long after marketing exclusivity expires.

The paragraph IV certification is therefore a potent means to speed up an otherwise lengthy period of stifled competition. Additionally, under the Medicare Modernization Act, companies are given a powerful incentive to make use of the Paragraph IV certification process. The first applicant (or applicants) to successfully challenge a patent is eligible for 180 days of marketing exclusivity during which time the FDA will not approve other generic products for the same drug and condition. This gives the generic drug companies time to recoup costs it may have incurred during litigation.

 

Litigation over Paragraph IV disagreements generally is resolved in either of two ways: Either the parties enter into a settlement agreement, or a court determines the validity of the patent(s). Litigation may also extend past the initial 30-month stay, which may permit a company to launch “at-risk,” making the company liable for damages if the court determines that the patent in question was valid at the time of market entry.

 

It’s important to note that Paragraph IV certification disputes are almost always bench trials, meaning a judge presides without a jury. This permits trials to occur more quickly and allows a judge to make decisions “on the papers,” or from the documentary evidence. Of course parties can move more quickly by coming to a settlement agreement, but that may lead to additional scrutiny from the Federal Trade Commission, such as in the case of so-called “Pay for Delay” agreements.

 

What’s New

Social distancing measures required by COVID-19 have disrupted or otherwise changed the operations of courts across the country.

 

While many courts are open, they may be operating at reduced capacity. Proceedings and depositions may need to take place entirely by teleconference. Certain legal processes, like document discovery, may be especially complicated.

 

Patent litigation generally requires a significant body of expert opinion, such as from patent lawyers, engineers, product developers and bench scientists. Coordinating dozens of people on a teleconference can be a logistically difficult task to conduct a smooth deposition.

 

However, as Fish & Richardson principals Geoff Biegler, Megan Chacon and Madelyn McCormick explained in Law360 this week, “some courts may be willing to proceed with ‘trial by Zoom’ and greater reliance on the papers in order to address the urgency attendant with the intellectual property rights of drug companies and the 30-month stay.”

 

Still, already crowded courts might find some cases in need of more urgent resolution.

 

As the country begins to slowly re-open from lockdown measures, it’s possible that some court systems may be more operational than others. Since certain court systems, such as those in Delaware and New Jersey, are more familiar with pharmaceutical patent litigation, regulatory affairs professionals may depend much on the public health efforts of those states.

 

What’s Next

Delays in court proceedings could ultimately translate into delays for some generics coming to market, or increase the risks of a generic product needing to launch “at-risk.”

 

It’s still early in the pandemic to know exactly what the effect of court delays could be on generic drug approvals. The FDA hasn’t shown signs of slowing—yet, even as it moves to make more of its meetings virtual.

 

Generic drug applications, however, take many months to review and the full impact on the FDA is only likely to be fully seen later this year. For litigation, it may be difficult to determine the effects of any delays without looking at drugs on a case-by-case basis.

 

For drug manufacturers currently in the 30-month period or considering applying for an ANDA, consider that any delay or slow-down likely has more benefits for the RLD holder. Active negotiations outside the legal system could be the most effective way to mitigate these effects.

 

Biegler, Chacon and McCormick suggested three approaches to mitigate some of these impacts for ANDA seeks and RLD patent holder defendants:

  • The parties can come to an agreement about any extensions to timelines or waivers of requirements as allowed by law, or they can settle.
  • Parties can seek an extension of the 30-month stay.
  • A party can get an injunction if any of the above are not successful.

However, each of these approaches has its disadvantages. A generic drug company may not wish to further delay the launch of their drug, just as a branded drug company may not wish to expedite a hearing. Parties can come to settlement agreements, which could be more beneficial for a generic drug company if delays in the legal process increase the costs of litigation.

 

To contact the author of this analysis, email Aaron Badida.
To contact the editor of this analysis, email Alec Gaffney.

 

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