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On July 9, the U.S. Court of Appeals for the Federal Circuit heard arguments in a groundbreaking case with significant implications for the pharmaceutical industry. When it renders its opinion in Pfizer Inc. v. Dr. Reddy’s Laboratories Ltd., Appeal nos. 03-1227-1258 (Fed. Cir.), the Federal Circuit will consider, for the first time, the scope of patent rights available during a patent’s term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, known as the Hatch-Waxman Act. The decision will define how closely generic manufacturers will be able to compete with brand-names during the patent term extension. At the heart of the case is whether a patent owner is entitled to the full scope of a patent on its product during a patent term extension granted under the Hatch-Waxman Act, or if the scope of the patent during the extension is limited only to the specific ingredient approved by the Food and Drug Administration (FDA). In Pfizer, the Federal Circuit is reviewing the U.S. District Court for the District of New Jersey’s ruling that, during the patent term extension, the scope of Pfizer’s patent covering Norvasc, a high blood pressure medicine, is limited to the FDA-approved active ingredient of Norvasc, amlodipine beyslate. The Federal Circuit’s decision will have financial repercussions for both brand-name and generic drug manufacturers. It will also affect the industry as a whole. For example, if the Federal Circuit upholds the district court’s ruling, the decision would allow generic drug manufacturers to compete with brand-name drugs before the patent term extensions expire by selling alternative versions of the approved product. This the generic manufacturers cannot do with traditional generic drugs, which are identical copies of brand-name drugs. Thus, a narrow interpretation of extension rights would likely encourage the development of alternative versions of brand-name drug products, while a broad interpretation could stifle such development. Moreover, a decision upholding the district court will likely prompt brand-name companies more vigorously to challenge the FDA’s reliance on proprietary safety and efficacy data of brand-name drugs in approving alternative drug products under � 505(b)(2) of the Federal Food, Drug and Cosmetic Act. To provide some background, the FDA permits approval of drugs under a hybrid statutory approval mechanism known as a � 505(b)(2) new drug application (NDA). This mechanism involves a simplified application process for variations of previously approved drugs when the modified product is not eligible for the conventional abbreviated new drug application (ANDA) process for generic drugs. Specifically, � 505(b)(2) application permits a sponsor to rely on the FDA’s findings of safety and efficacy for the previously approved drug product, without requiring the sponsor to obtain a right of reference from the original applicant. While duplication of preclinical and certain human studies is avoided, specific studies are ordinarily required to establish the relevance and applicability of the FDA’s prior findings to the alternative product. Thus a decision upholding the district court would likely result in brand-name companies stepping up their challenges to the FDA’s authority to rely on brand-name proprietary safety and efficacy data in approving � 505(b)(2) applications. Further, if close competition is allowed, brand-name manufacturers will argue that patent term extensions are essentially valueless. The average such extension under Hatch-Waxman is approximately 2.6 years. (The U.S. Patent and Trademark Office’s Web site ( www.uspto.gov/web/offices/pac/dapp/opla/term/156.html) provides data on all patents that have received an extension. Those data were used to calculate the average length of the extension.) Each day that a brand-name manufacturer maintains the right to exclusive sales can be worth millions of dollars. Given that brand-name market share can drop as much as 40% to 80% within the first year of competition from generics, an affirmance of the lower court’s decision could significantly reduce revenues earned from certain brand-name drug sales. Patent term extensions Generally, the Hatch-Waxman Act allows extensions based on the amount of time a drug spends in the FDA review process. The length of an extension equals half of the time spent in clinical testing after the patent is granted, plus all of the time that the FDA spends reviewing the new drug application after the patent issues. Patent term extensions are subject to certain limits; most notably, an extension cannot exceed five years. Only one patent for each newly approved chemical entity is eligible for an extension. A patent can only be extended once. If a drug is covered by more than one patent, the manufacturer must choose which will receive the extension. Extensions are typically applied to the patent covering the drug’s active ingredient (a compound patent), and occasionally to a patent on a method of treating a patient with the drug (a method of use patent). Manufacturers must apply for an extension no more than 60 days after the FDA approves a drug for marketing. For purposes of calculating a patent term extension, the clinical testing phase starts when the manufacturer files an investigational new drug application, which allows clinical testing in humans to take place. In December 2002, the District of New Jersey determined that a patent extended under 35 U.S.C. 156 is not entitled to the full scope of the patent claims during the extension period, but that the rights extend only for the active ingredient indicated in the FDA-approved product that formed the basis of the extension. See Pfizer Inc. v. Dr. Reddy’s Laboratories Ltd., No. 02 Civ. 02829, 2002 WL 31833744 (D.N.J. Dec. 17, 2002). Specifically, the court ruled that the term extension for Pfizer’s U.S. Patent No. 4,572,909 (the ’909 patent) covers only amlodipine besylate, the active ingredient of the FDA-approved drug Norvasc. The full scope of the ’909 patent covers the molecule amlodipine, including the derivative salts amlodipine besylate and amlodipine maleate. Of those compounds, Pfizer applied for and obtained FDA approval to market amlodipine besylate as the hypertension and heart disease drug Norvasc. Based on the FDA review period, Pfizer obtained an extension for the ’909 patent of more than three years, from Feb. 25, 2003, to July 21, 2006. In March 2002, Dr. Reddy’s filed an NDA under � 505(b)(2) of the Federal Food, Drug and Cosmetic Act seeking market approval for amlodipine maleate for the same uses as Norvasc. The FDA approved Dr. Reddy’s application. Dr. Reddy’s anticipated marketing amlodipine maleate as soon as August 2003, just six months into Pfizer’s three-year extended term for the ’909 patent. In June 2002, to prevent Dr. Reddy’s amlodipine maleate product from coming to market, Pfizer sued Dr. Reddy’s in the District of New Jersey, claiming that Dr. Reddy’s product infringes the ’909 patent for amlodipine during the patent term extension. Dr. Reddy’s moved to dismiss Pfizer’s suit on the ground that the extension for the ’909 patent is limited to amlodipine besylate, the approved active ingredient of Norvasc. The district court granted Dr. Reddy’s motion to dismiss, ruling that the provisions of Hatch-Waxman extend the patent term only with respect to the product approved by the FDA, in this case, Norvasc, which lists only amlodipine besylate as the active ingredient and not the amlodipine ion. Dr. Reddy’s did not infringe Pfizer’s patent, the district court held, because Dr. Reddy’s product contains the active ingredient amlodipine maleate, which is a different salt than the active ingredient of Norvasc, amlodipine besylate. Oral argument During oral argument before Federal Circuit Chief Judge Haldane Robert Mayer and judges Pauline Newman and Alan D. Lourie, Pfizer argued that allowing a manufacturer to reformulate a company’s invention merely by changing the salt or ester to create a competing drug undermines all incentive to innovate and renders the extension essentially useless. To be effective, the “right to exclude” granted by the extension must cover all other compounds indicated for the same use as Norvasc, Pfizer argued. To illustrate its point, Pfizer noted that if the district court’s holding were applied to products such as medical devices, another company would be able to compete with the patentee during the extension term by making trivial modifications. For example, to compete with a pacemaker that claimed a certain power source, a company other than the patentee could replicate the entire design and avoid infringing the patent simply by changing the type of battery used. Dr. Reddy’s responded by stating that the reason Congress enacted the Hatch-Waxman Act was to compensate a patentee for time lost in applying for FDA approval. Therefore, Dr. Reddy’s argued, the statute was crafted to implement this policy by extending the term of patent protection for the approved product-the product that was actually subjected to regulatory delays-in this case Norvasc. Dr. Reddy’s pointed out that if the extension applies to every compound covered by the patent, then Pfizer would receive a windfall unintended by Congress. Pfizer further argued that Congress never intended that during the extension period, generic manufacturers would be allowed to compete with innovators using the innovator’s own invention. Pfizer pointed out that Dr. Reddy’s product may not have been filed using a “paper” NDA, but that Dr. Reddy’s had access to the entire body of testing data for amlodipine besylate, all of which was generated by Pfizer, and, moreover, that the data also included earlier testing studies on amlodipine maleate. Dr. Reddy’s acknowledged that FDA approval for amlodipine maleate was obtained by relying on Pfizer’s amlodipine besylate data, but that Pfizer’s close characterization of amlodipine maleate and amlodipine besylate is misleading. Dr. Reddy’s asked the court to consider the fact that amlodipine maleate is not the generic equivalent of Norvasc by highlighting the millions of dollars spent not only for product development, but in identifying different retail channels from those used by Norvasc. Dr. Reddy’s also argued that Pfizer still has the right to block production of generic equivalents filed under an ANDA. This right was unaffected by the court’s decision. Therefore, Pfizer’s claim that the district court’s decision destroyed the value of the patent term extension was without merit, Dr. Reddy’s argued. Federal Circuit’s concerns In considering the scope of patent term extension rights, the Federal Circuit focused on whether the extension applied only to the exact active ingredient approved by the FDA, or whether it would also encompass various salts and esters of that active ingredient. While the FDA considers two salts to be different products for drug-approval purposes, the court questioned whether such a narrow interpretation should be read into patent claims. Noting that the FDA cannot review every single form of a compound, the court appeared to distinguish between the rationale behind FDA policy, which is to protect “safety and efficacy,” and patent law, which is supposed to provide a temporary monopoly as an incentive to innovate. Also of significance to the Federal Circuit was Dr. Reddy’s reliance on Pfizer’s safety and efficacy data for Norvasc in seeking approval of its generic drug product. The judges’ questions indicated a concern that the data available under the � 505(b)(2) procedure meant that close competition allowed during the extension may be at the patentee’s expense. The court also observed that, if Dr. Reddy’s was allowed to rely on test data for Norvasc, the two products could not really be considered separate and distinct. Questions from the Federal Circuit also centered on whether the district court’s ruling serves Congress’ intent in enacting the extension provisions of Hatch-Waxman. The Federal Circuit seemed to entertain Pfizer’s argument that the district court’s ruling would quickly gut the market share of brand-name drugs and that Congress never intended to allow generic manufacturers to make a slight alteration to a brand-name product and compete directly with the brand-name drug during the patent term extension. In response, Dr. Reddy’s argued that brand-name manufacturers should not benefit from a “windfall” of an extended monopoly for products that may differ from the approved product and that never underwent regulatory review. Overall, the Federal Circuit expressed concern that the district court may have interpreted the scope of the ’909 patent too narrowly in light of Dr. Reddy’s reliance on the safety and efficacy data for Norvasc, which Pfizer submitted to the FDA in obtaining approval for amlodipine beyslate. Therefore, possible consideration in the court’s decision could be Dr. Reddy’s reliance on Norvasc data in its � 505(b)(2) application for amlodipine maleate. During the argument, the court tried to reconcile how Dr. Reddy’s amlodipine maleate product could fall outside the scope of Pfizer’s patent for Norvasc during its patent term extension, but at the same time Dr. Reddy’s could rely on the Norvasc data to support its own FDA approval. Difficult to predict the ruling It appears unlikely that the Federal Circuit will rule that the patent term extension rights extend to the entire scope of the patent at issue, since at least one judge observed that, having never been subject to regulatory review, other compounds claimed by the ’909 patent are not covered by the extension. However, the Federal Circuit could extend the scope of the extension rights to include all salts and esters of the active ingredient in the approved product. Under this scenario, extension rights would cover near-identical formulations, particularly when the only difference between the pioneer and alternative is the salt or ester form of the active ingredient. Even if the Federal Circuit does issue a broader interpretation of patent term extension rights than those determined by the district court, it is not certain how far the Federal Circuit will expand such rights. Whether the court would expand extension rights to include new combination products-including substitution of an active ingredient in a combination product-or products having the same active ingredient, but differing from the approved product in dosage form, strength, dosage release, dosing regimen, formulation or route of administration, remains to be seen. Given the complexity of the issues at hand, the Federal Circuit’s decision, which is expected in 2004, cannot be predicted with any certainty. Alternative versions Given that the Federal Circuit’s ruling could take into account, at least in part, Dr. Reddy’s reliance on Pfizer’s test data for Norvasc in obtaining approval for its � 505(b)(2) application, the court’s decision could have a significant impact on the development of alternative versions of brand-name drug products under � 505(b)(2). If, for example, the court finds that Dr. Reddy’s product does not infringe Pfizer’s patent, then brand-name manufacturers may step up their challenges to the FDA’s authority to rely on brand-name proprietary safety and efficacy data in approving � 505(b)(2) applications. If the FDA is not able to rely on pre-existing test data in approving an alternative drug, then generic manufacturers would have to spend substantial amounts of money and time conducting their own clinical trials to establish safety and efficacy on alternative forms of brand-name drugs. This could act as a barrier to market entry for alternative drug products. One argument advocated by brand-name manufacturers in challenging the FDA’s authority is that the FDA’s reliance on proprietary data for approving � 505(b)(2) NDAs constitutes an unconstitutional taking of the innovator’s data in violation of the Fifth Amendment of the U.S. Constitution. Currently, there are at least three pending citizen petitions filed with the FDA making such a challenge; two of these petitions were filed by Pfizer, and another by BIO, a nonprofit trade organization devoted to the advancement of biotechnology. The FDA has yet to rule on the petitions. Philippe Bennett is a partner and group leader of Coudert Brothers’ intellectual property group. Thomas J. Parker is counsel, and Amy S. Manning is an associate within the group. Melissa B. Apfelbaum, a summer associate at the firm and a student at Columbia University Law School, assisted in the preparation of this article. Manning and Apfelbaum attended the oral argument in the Pfizer case.

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