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Generic drug companies and brand-name pharmaceutical companies have been engaged in high-stakes, closely watched legal battles inwhich they are testing several strategies under the Hatch-Waxman Act for gaining or maintaining market share. Although generic drug manufacturers have lost recent battles against brand-name drug manufacturers that sought to delay the generic’s entry into the market, dicta in a recent decision of the U.S.Court of Appeals for the Federal Circuit, Andrx Pharmaceuticals Inc. v. Biovail Corp., 276 F.3d 1368 (Fed. Cir. 2002), suggest that such challenges may not be foreclosed in the future. Andrx Corp., a generic drug manufacturer, challenged theFood and Drug Administration’s failure to approve its abbreviated new drugapplication (ANDA) and to delist a drug patent owned by Biovail from an FDApublication known as the “Orange Book.” Following the recent decisionin Mylan Pharmaceuticals Inc. v. Thompson, 268 F.3d 1323 (Fed. Cir.2001), the Federal Circuit rejected Andrx’s argument that such relief was available in a declaratory judgment action brought under the patent laws. The Federal Circuit suggested in dicta, however, that such relief may lie under the Administrative Procedure Act (APA). A drug manufacturer that develops a new drug must obtain approval from the FDA to market the drug by filing a new drug application(NDA). If the new drug or a method of using it is patented, that information is also supplied to the FDA. The FDA publishes the patent information in its Orange Book (the Approved Drug Product With Therapeutic Equivalence Evaluations publication). Before the Hatch-Waxman Act, a patentee could prevent a genericdrug manufacturer from making, using, offering to sell or selling the patenteddrug until the expiration of the full patent term. Activities preparatory to post-patent term introduction of ageneric drug were held not to be an exception to patent infringement. RocheProducts Inc. v. Bolar Pharmaceutical Co. Inc., 733 F.2d 858, 863 (Fed.Cir. 1984). Before the Hatch-Waxman Act, generic drug manufacturers could noteven begin the process of preparing to introduce a generic drug until after theexpiration of the patent on the drug. Some held the view that this process resulted in a de facto extension of the patent term. HATCH-WAXMAN ACT The Hatch-Waxman Act was an attempt to balance the competing interests of brand-name and generic drug companies. Under 35 U.S.C. � 271(e)(1), it is no longer an act of patent infringement for generic manufacturers to conduct the testing necessary for FDA approval. Under the Hatch-Waxman Act, a generic drug manufacturer can obtain FDA approval beforethe expiration of a patent listed in the Orange Book to market a generic drug.As part of this process, the applicant must submit an ANDA, which is a requestto market a generic version of a drug. The ANDA includes a showing that the generic drug is bioequivalent to the drug approved in the ANDA. The ANDA also includes one of four certifications with respect to each patent listed in the Orange Book: thatno such patent information has been submitted to the FDA; that the patent hasexpired; that the patent is set to expire on a certain date; or that the patentis invalid or will not be infringed by the manufacture, use or sale of the newgeneric drug for which the ANDA is submitted. See21 U.S.C. � 355(j)(2)(A)(vii). Although preparation of an ANDA is not an act ofinfringement, the filing of a Paragraph IV Certification in connection with theANDA is considered a technical act of infringement. 35 U.S.C. � 271(e)(2). When the ANDA includes a Paragraph IV Certification, the ANDA applicant must notify the patentee and the NDA holder — who may or may not have title to the listed patent(s) — and set forth the factual and legalbasis for the opinion that the listed patent is invalid or will not be infringed by the generic drug. The patentee then has 45 days to initiate an action against the ANDA applicant for patent infringement. If the patentee doesnot file suit, the application may be approved. If the patentee files suit, theFDA cannot approve the ANDA until the earliest of: expiration of the patent;resolution of the suit; or 30 months after the patentee’s receipt of notice,known as the delay period. 21 U.S.C. � 355(j)(5)(B)(iii). The statute also provides for shorter or longer delay periods as the court may order because “either party to the action failed to reasonably cooperate in expediting the action.” Generic manufacturers have suggested that these provisions give an unfair advantage to NDA holders. The FDA does not make an independent determination of whether a patent is properly listed in the Orange Book.Regardless of whether patents are properly listed, however, an ANDA filer mustmake a certification for all listed patents. This enables the NDA holder toinitiate suit whenever a Paragraph IV Certification is made and, thus,forestall any approval of the ANDA for 30 months. Given that the market forsole-source drugs can amount to more than $1 billion per year, the value of the 30-month delay period is apparent. THE ‘ANDRX’ DECISION Andrx Pharmaceuticals Inc. v. Biovail Corp. continues to clarify the law governing generic drug approvals by the FDA and the enforcement of patents directed to such drugs. In September 1995, the FDAapproved Biovail’s NDA for Tiazac (diltiazem hydrochloride), a drug used totreat hypertension and angina. Biovail also certified to the FDA that U.S. Patent5,529,791 (the ’791 patent) claimed Tiazac, and the FDA listed the ’791 patent in the Orange Book. Andrx filed an ANDA, including a Paragraph IV Certification, for approval of its generic version of Tiazac. Biovailsubsequently filed suit for infringement of the ’791 patent. As a result offiling suit and pursuant to 21 U.S.C. � 355(j)(5)(B)(iii), approval of Andrx’s ANDA was stayed. The district courtultimately entered a judgment of no infringement of the ’791 patent for Andrx,which the Federal Circuit affirmed. Before resolution of the ’791 patent suit, however, Biovailobtained an exclusive license for U.S. Patent 6,162,463 (the ’463 patent),which claimed an extended release formula for the active ingredients of Tiazac.Biovail also used a different manufacturing process for the drug, whicharguably brought Tiazac within the scope of the ’463 patent. Just prior toresolution of the ’791 patent action, Biovail filed with the FDA a request tolist the ’463 patent in the Orange Book to cover Tiazac. As a result of thatlisting, the FDA informed Andrx that its ANDA would not be approved at the endof the 30-month delay period begun by the first suit. Although Andrx protestedthe new listing, the Orange Book continued to list the ’463 patent. Andrx filed suit in the U.S. District Court for the SouthernDistrict of Florida against Biovail, the FDA, the FDA commissioner and thesecretary of Health and Human Services, seeking, among other things, adeclaratory judgment that the ’463 patent was invalid and not infringed, thedelisting of the ’463 patent from the Orange Book, and a shortening of thedelay period. Andrx also filed a Paragraph IV Certification. Biovail filed aparallel suit in the same district court for infringement and sought a new 30-monthdelay of approval of Andrx’s ANDA. The district court consolidated the actions. AndrxPharmaceuticals Inc. v. Biovail Corp., 175 F. Supp. 2d 1362 (S.D. Fla.2001). Finding that “Hatch-Waxman does not contemplate a private right ofaction apart from the patent infringement lawsuit,” the court dismissedAndrx’s cause of action to delist the ’463 patent. Id. at 1369. Thedistrict court also dismissed the federal defendants — i.e., the secretary ofHHS, the FDA commissioner and the FDA — because Andrx failed to state a claimfor relief against those defendants under the Administrative Procedures Act(APA), 5 U.S.C. �� 702-706. According to the court, “the Amended Complaintdid not put the Federal Defendants on notice of their alleged violations of theAPA, even under the liberal notice pleading standard of the Federal Rules ofCivil Procedure.” Id. at 1368. The district court also granted Andrx’s motion for summary judgment to shorten the 30-month stay pursuant to 21 U.S.C. � 355(j)(5)(B)(iii). The court found that “Biovail’s actions with regard to obtaining the ’463 patent after tentative approval of Andrx’s generic drug andchanging the formulation of its own approved drug, Tiazac, to come within thenewly obtained patent were done to impede or delay the expeditious resolutionof the patent actions.” 175 F. Supp. 2d at 1375. The court ordered thatthe delay period end shortly after the district court’s decision and that theFDA approve Andrx’s ANDA. Andrx’s infringement and validity claims were dismissedfrom Andrx’s lawsuit on the basis that they were premature and thus barred, butwere preserved as counterclaims to Biovail’s infringement action. The district court’s decision was reported in the generalpress and had an immediate impact upon Biovail’s stock. See, e.g., IanKarleff, “Biovail Loses Exclusivity on Tiazac to Andrx,” Reuters,Sept. 21, 2001, biz.yahoo.com/rf/010921/ n21165681_1.html. THE FEDERAL CIRCUIT DECISION On appeal, the Federal Circuit vacated the district court’sorder shortening the 30-month statutory delay period and ordering the FDA toapprove Andrx’s ANDA. The Federal Circuit held that the district court exceededits authority under 21 U.S.C. � 355(j)(5)(B)(iii) in shortening the delay andordering approval of the ANDA. The court also rejected Andrx’s argument thatthe district court decision could be affirmed on an alternative ground, i.e.,that it had stated a claim against the FDA under the APA. The Federal Circuit found that the district court had madean “overly broad” reading of the statute for at least three reasons.First, the court noted that the relevant inquiry for whether an Orange Bookpatent listing is proper is the relationship between the patent and the drugscovered by the NDA, not the drug being marketed. As such, the Federal Circuitrejected the district court’s finding that Biovail intentionally delayed bychanging the manufacturing process for Tiazac. Second, the Federal Circuit dismissed the argument that thedistrict court could shorten the delay period because of Biovail’s allegeddelay in resolving the “overall” patent dispute. The court found nosupport in the statute that would justify relying upon any delay other thanthat relating to the particular infringement action. Third, the Federal Circuit stated that, under MylanPharmaceuticals, a district court is not authorized to shorten the statutorydelay period in an infringement action because of Biovail’s alleged improperconduct before the FDA. In Mylan, the Federal Circuit held that a generic drugmanufacturer could not prevail in a declaratory judgment action against apatentee by challenging the propriety of an Orange Book listing as a defense topatent infringement and that the delisting of a patent from the Orange Book wasnot an available remedy. It held that “[Mylan's] claim is not a recognizeddefense to patent infringement.” 268 F.3d at 1330-32. In Andrx, however, the Federal Circuit suggests,albeit in dicta, that an ANDA applicant may be able to sue the FDA directlyunder the APA to compel approval of an ANDA or to delist a patent from theOrange Book. These dicta may prove to be a foreshadowing of suits yet to come. According to the Federal Circuit’s dicta in Andrx, itappears that an ANDA applicant may bring an action under the AdministrativeProcedure Act, 5 U.S.C. �� 702-706, to compel the FDA to approve the ANDA ifthe FDA’s action in denying the ANDA is “arbitrary, capricious, or not inaccordance with law.” 276 F.3d at 1378. The court further noted that if a party wins its APA claim,”it is entitled to a remedy under the statute, which normally will be avacatur of the agency’s order.” Id. at 1379. As support for the court’s proposition that FDA decisionsmay be subject to review under the APA, the court relied on Supreme Courtprecedent and decisions from the U.S. Court of Appeals for the District ofColumbia that have recognized a cause of action under the APA for addressingthe FDA’s actions. Andrx argued that the district court’s decision should beaffirmed on appeal because Andrx properly stated a claim under the APA. Andrxdid not win this argument, however, because the Federal Circuit found thatAndrx’s complaint did not allege “that any of the claims arose under theAPA or that the FDA had acted arbitrarily, capriciously, or not in accordancewith law in denying approval of the ANDA.” Id. at 1379-80. TheFederal Circuit also found that the complaint did not include “a specificcount alleging any wrongdoing by the Federal Defendants.” Id. at1380. The Federal Circuit vacated and remanded the districtcourt’s order, specifically leaving open the option for Andrx to amend itscomplaint to state a proper claim against the FDA under the APA. The complaintmust allege a claim that arose under the APA, and it must allege that the FDAacted arbitrarily, capriciously or not in accordance with law in denyingapproval of the ANDA. OTHER ALTERNATIVES Accordingly, the Federal Circuit suggests a possible meansfor reviewing FDA conduct in connection with approving ANDAs and delistingpatents from the Orange Book. Other mechanisms are being considered. Forexample, senators Charles Schumer, D-N.Y., and John McCain, R-Ariz., haveproposed certain changes to the Hatch-Waxman Act. The Greater Access to Affordable Pharmaceuticals Act of 2001,S. Res. 812, 107th Cong. (2001) proposes, among other things, to eliminate thestatutory 30-month stay of FDA approval when a brand-name drug manufacturersues a generic manufacturer. The legislation also would require brand-name manufacturersto list all of a drug’s relevant patents and certify with the FDA that the listis complete and accurate. Another change being proposed would enable a genericdrug company to seek a declaratory judgment from a court to determine themerits of its patent challenge. Since the stakes for both the brand-name and generic drug companies are high, one can expect to see a great deal more litigation in this area. Lynn B. Morreale, [email protected], is a partner andpatent litigator at Philadelphia’s Woodcock Washburn, www.woodcock.com, with expertise inchemistry and pharmaceuticals. Emma R. Dailey, [email protected], anassociate at the firm, specializes in patent litigation and patent prosecution,with an expertise in biotechnology.

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